INDIA Trends and Developments Contributed by: Ajay Kumar, Anchal Nanda and Hetram Bishnoi, KLA Legal
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The Cape Town Convention Act in India: What It Means for Aviation Stakeholders Introduction 16 April 2025 marked a watershed moment for the Indian aviation industry, as the President assented to the Protection of Interest in Aircraft Objects Bill, 2025 (“Cape Town Convention/CTC Act”), a law that enforces the Convention on International Interests in Mobile Equipment and the Protocol to the Conven - tion on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (”Cape Town Convention”, or CTC). On 1 May 2025, the CTC Act came into force as notified by the government. The Cape Town Convention provides a comprehen - sive international legal framework for the creation, recognition, registration and enforcement of security interests, leases and title reservation rights in aircraft objects, including airframes, aircraft engines and hel - icopters. It establishes uniform rules to protect the rights of creditors, lessors and financiers by enabling them to register their interests in an international reg - istry, enforce remedies on default (including repos - session, sale and interim relief) and retain priority over competing claims. The CTC also conceptualises an International Regis - try, which is a publicly accessible database that serves as a notice to third parties regarding these interests. The Aircraft Protocol supplements the Convention by tailoring its application to the aviation sector, cross- border enforcement and the recognition of rights dur - ing insolvency, and by promoting creditor confidence
through clear, predictable and enforceable rights in high-value mobile aviation assets. The Convention, together with the Protocol, was acceded to by India in 2008, following which the state took several steps to ratify it and bring its national leg - islation in line with the Convention. The International Civil Aviation Organization (ICAO) is the supervisory body for the Convention, and the International Insti - tute for the Unification of Private Law (UNIDROIT) acts as the depository thereof. The Convention and Protocol contain a number of optional provisions that contracting states can decide whether or not to adopt. These optional provisions are set out in the form of declarations and are an integral part of the treaty system. The Cape Town Conven - tion is applicable to Aircraft Objects, which includes airframes, aircraft engines and helicopters. Why the need for the CTC in India As the most populous nation in the world, India has seen an unprecedented surge in air passenger traf - fic. India’s aviation sector has demonstrated robust growth over the years, with domestic passenger traffic increasing by 11% year on year; domestic passenger traffic alone is expected to reach 300 million annually by 2030. To cater to this rising demand, Indian airlines have aggressively expanded their order books. However, amid this growth, systemic and historical issues have plagued key stakeholders and weakened lessor appetite in the country. In the past, lessors and financiers of aircraft faced serious challenges in
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